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Social Security—2008 Factors On Oct. 17, the Social Security Administration announced updated factors for 2008. Wage Base The maximum amount of earnings taxable in 2008 is $102,000 for Social Security purposes. COLA The cost-of-living increase in benefits is 2.3 percent, first applicable to December 2007 benefits, payable in January 2008.

Wage Index The average annual wage figure of $38,651.41 will be used in computing benefits for workers who become eligible in 2008. This figure is based on data for the last complete year (2006) and was used to determine other wageindexed numbers given in the table below.

FACTOR

2008

Wage base:

2007

$   102,000 No Limit $    75,900

$    97,500 No Limit $    72,600

Cost-of-living increase (applies to December benefits, payable in January) Average annual wage (based on data two years earlier)

2.3% $38,651.41

3.3% $36,952.94

PIA formula, 1st bend point PIA formula, 2nd bend point Maximum family benefit, 1st bend point Maximum family benefit, 2nd bend point Maximum family benefit, 3rd bend point

$       711 $     4,288 $       909 $     1,312 $     1,711

$       680 $     4,100 $       869 $     1,255 $     1,636

Retirement test exempt amount (annual) below SSNRA

$    13,560

$    12,960

$    36,120

$    34,440

$     1,050

$      1,000

6.20% 1.45% 7.65%

6.20% 1.45% 7.65%

15.30%

15.30%

for Social Security for Medicare old-law wage base, for indexing PBGC maximum, etc.

year of SSNRA Wages needed for one quarter of coverage FICA (employee) tax rate: Social Security (OASDI) Medicare (HI) Total SECA (self-employed) tax rate, total

IRS Pension Limits for 2008 Principal Limits IRC

Limit

415(b)(1)

Defined benefit plan limit

415(c)(1)

Defined contribution plan limit

401(a)(17)

Limit on includible compensation *

402(g)(1)

Limit on 401(k)/403(b) elective deferrals

414(q)

HCE definition

414(v)(2)

401(k)/403(b)/457(b) Catch-up deferral limit

2008 2007 2008 Next % Increase Rounded Rounded Unrounded Increment Needed $185,000

$180,000

$187,424

$190,000

1.4%

46,000

45,000

46,856

47,000

0.3%

230,000

225,000

234,280

235,000

0.3%

15,500

15,500

15,866

16,000

0.8%

105,000

100,000

105,856

110,000

3.9%

5,000

5,000

5,289

5,500

4.0%

Other Limits IRC

Limit

2008 2007 2008 Next % Increase Rounded Rounded Unrounded Increment Needed

457(b)

Limit on nonqualified deferrals

$15,500

$15,500

$15,866

$16,000

0.8%

416(i)

Top-heavy key employee definition

150,000

145,000

152,282

155,000

1.8%

409(o)(1)(C)

ESOP payouts, five-year limit

935,000

915,000

937,120

940,000

0.3%

409(o)(1)(C)

ESPO payouts, additional one-year limit

185,000

180,000

187,424

190,000

1.4%

408(k)(2)(C)

SEP pay threshold

500

500

527

550

4.4%

* Governmental plans have special rules for eligible participants as defined in OBRA ’93.

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